Outsourcing 2.0: oDesk CEO Gary Swart (Part 6)

Sramana: Enterprise deals could be a good option for you. I could see oDesk doing $10 million-a-year deals.

Gary Swart: There are some differences in that type of business. It requires a lot of touch. They would want one throat to choke. oDesk would have to be the employer of record and that the companies would be indemnified if a worker in Russia gets hit by a bus while they are doing work for their tasks. A lot more infrastructure would need to be put in place and it has a long sales cycle.

That being said I do think the opportunity is there to move up. I will liken our situation to SalesForce.com where in the early days they focused on the small and medium businesses. Once you own that hill, it is a lot easier. Salesforce could have easily gone after enterprises in the early days, but the big companies would have wanted to audit the data center and all that other stuff.

Salesforce instead built a massive telesales organization. The average number of seats during their first five years of business was five. Once they owned SMB, they started going after Cisco, Symantec, and Merrill Lynch. Once four district managers at Cisco had Salesforce because their Sybil forecast was not accurate and their reps wanted to use something that worked, then they could go penetrate Cisco. By then the market had caught up. Imagine Cisco telling people in the early days that they were going to put their customer data in the cloud. There is not a chance that would have happened.

We went and talked with Xerox. They love it, and think it makes a lot of sense. They have 20 use cases where they think it will make sense. We then spent the next six months with Xerox HR. They want a 52-page agreement signed and we were dealing with 17 lawyers. They are used to having five people on site at Rochester. We don’t have to do that because of the massive market out there.

Sramana: I run the 1M/1M program. I am constantly telling entrepreneurs not to hire; I always tell them to use oDesk or Elance. Now that you clarify your approach, I think my audience will trend towards oDesk. The one thing that bothers me, and the reason I am probing the health insurance question is that I want people to be safe. I want them to have health insurance. But I don’t want that burden on me, so I like your option.

Gary Swart: There are two ways to do it. One is to make them on-demand W2 employees through oDesk, which would cost them a little something. The other way is to turn them on to our health plan where all they have to do is dial a 1-800 number and they can have coverage tomorrow. We think it is good. We shopped around. Elance has built a nice business for fix-priced work. If you need something done and it is well specified, then Elance is good for the buyer of services. You know that it will be a race to the bottom. The firm wants to do the work, even at a loss, so they can pull you out of the Elance system. It is almost like Elance is monetizing the lead generation.

This segment is part 6 in the series : Outsourcing 2.0: oDesk CEO Gary Swart
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